Meta on SMBs: Pandemic-Related Issues Wane, Replaced by Inflation, Supply Chain Worries

Closure rates for small and midsized businesses and other challenges related to the pandemic are beginning to stabilize, but they are being replaced by new roadblocks, such as inflation, according to the latest edition of the Global State of Small Business Report. Meta’s ongoing series of reports surveys more than 20,000 business leaders across 30 countries to help analyze the health of SMBs on a worldwide basis. The company wrote in the report’s introduction, “The global economy appears to be in a tenuous position. There are large inflationary pressures in many markets, supply chain disruptions and the prospect of recession for many countries and territories. At the same time, several indicators, such as employment levels, point to an economic stabilization since the initial economic shocks of the Covid-19 pandemic (Bureau of Labor Statistics 2022). This dual prospect can make it more difficult to understand the true economic direction of SMBs and increases the need for up-to-date data and insights to assist policymakers in their efforts to understand their situations.” Key findings from the most recent report include: Closures of SMBs are slowing down, and an increased proportion of them are reporting higher sales: Meta said 19% of SMBs globally reported that they were not operational or engaging in any revenue-generating activities, compared with 20% in January, despite the fact that there are fewer government-mandated shutdowns or travel restrictions in place. Meanwhile, 40% of SMBs reported that sales in the past 30 days were higher than the same period in 2021, compared with 29% in the January report.SMBs owned by minorities were more likely to report closers but saw progress in other areas: The company said minority-owned SMBs were 8% more likely to report that their businesses were closed, but 7% more likely to report sales increases and 3% less likely to report sales drops. Black-owned SMBs were the most likely to report business closures, at 31%, down from 41% in January. And 20% of minority-led SMBs reported increasing their staff count, compared with 16% of other SMBs. As for the gender gap, 67% of SMBs owned by women reported rising or unchanged sales, versus 64% of those owned by men, while 33% posted lower sales, versus 38% of SMBs owned by men. A total of 23% of women-owned SMBs worldwide reported business closures, compared with 18% for men-led SMBs.Digital tools are more critical than ever and playing an outsized role for diverse-owned SMBs: Meta said 63% of SMBs generated some proportion of their sales over the past 30 days via digital channels, with 70% of minority-owned businesses saying so and 61% of other businesses. Digital sales accounted for 50% to 75% of total sales for 13% of SMBs owned by women and 8% owned by men, while 11% of women-owned businesses attributed 75% to 100% of their sales to digital, compared with 6% of those owned by men. Women also used digital tools more than men did for advertising (52% versus 42%), communicating directly with customers (60% versus 48%) and selling goods and services (45% versus 36%).Employment rose globally but was inconsistent across countries: 24% of SMBs worldwide boosted their staff in the past six months, up from 11% in January.Inflation and rising input costs are emerging issues for SMBs, particularly those involved in exporting: 45% of SMBs across the globe reported rising costs of inputs and raw materials over the past six months, compared with 23% in North America. A total of 54% of SMBs worldwide raised the prices for their goods and services by more than 5% over the past six months, with 9% reporting increases of more than 50%. Meta wrote, “The findings in this report demonstrate a clear shift in challenges away from those that arose as a direct result of the Covid-19 pandemic and toward new ones arising from market stabilization and new norms. In other words, we see signs of lessening effects from the initial shocks of Covid-19, but evidence of the broader economic restructuring that has begun to occur.”